Development of High-Tech Agriculture in Vietnam

August 09, 2017

If regulations are not enforced to curb environmental damage or stop-gap processes are not implemented to assist struggling farmers in coping with climate change, the agriculture industry in Vietnam will face major changes by the end of the century. The salinization of the Mekong Delta and decrease in agricultural land highlight the issues the nation will face.

Executive Summary:

If regulations are not enforced to curb environmental damage or stop-gap processes are not implemented to assist struggling farmers in coping with climate change, the agriculture industry in Vietnam will face major changes by the end of the century. The salinization of the Mekong Delta and decrease in agricultural land highlight the issues the nation will face. High-tech and climate-smart agriculture, which incorporate sustainability, economic growth, and environmental pressures, in formulating new farming methods and products can mitigate this trend. The government has already taken steps in promoting high-tech agriculture with its $4.4 billion credit line for high-tech agriculture projects. To maintain growth and commitment to high-tech and climate-smart agriculture from farmers in the region, introducing a pilot program or proof of concept to stakeholders will build trust and buy-in that will ultimately lead to implementation.

How We Define High-Tech and Climate-Smart Agriculture:

High-tech farming utilizes technology to produce more efficient, environmentally-friendly farming processes and better quality crops, compared to existing workflow models and iterations of crops. Effective high-tech farming introduces leaner operations for farmers and potentially higher returns, better quality and unchanged quantity of food for consumers, and better environmental conditions for the people in the region.[1]

Climate-smart agriculture, which is rather analogous to high-tech agriculture, presents innovative farming methods to alleviate some of the volatility in the agriculture sector because of climate change. If proof of concept and implementation are effective, climate-smart agriculture will help achieve national food security and economic development goals. These innovative methods incorporate elements of the following three principles: [2]

Sustainable growth: these approaches must match or exceed the current crop production so that the nation is not at risk for food insecurity, and that income and standard of living for farmers does not decline

Enhances resilience and adaptation: this produces hardier crops that can better withstand natural disasters and fluctuations in weather, quality of soil, and quantity of water. This also encourages farmers to diversify their cash crops, rather than to rely on a single crop, such as rice

The Current Agriculture Problem:

Climate change will negatively impact the livelihood of farmers, specifically rice farmers, in the Mekong Delta. Rice farmers must deal with both droughts and floods, with such extremes making it difficult to rapidly adjust. In regards to floods, more saltwater is pushed into the Mekong Delta and washes away much of the fertile soil in the area; both of which are not ideal growing conditions for rice. Rising sea levels due to climate change have also led to more saltwater entering the delta.[3]The erosion of river banks from these floods has contributed to the salinization of the Mekong Delta. Furthermore, Vietnam’s “Rice First” policy, implemented after the war to stabilize the economy and food security, has created an overdependence on rice.[4]Overdependence on a single cash crop, along with the erosion of fertile soil and salinization of the Mekong Delta, will pose issues for rice farmers. Should climate change trends remain constant, the nation may see a 7.2 ton decrease in rice yields and 3.2 percent loss of agricultural land by the end of the century.[5]

Stakeholders:

To understand how effective high-tech agriculture can be implemented in Vietnam, it is necessary to analyze the various stakeholders to see who the key players are, who holds power, and where there may be pain points with respect to buy-in.

Bank for Investment and Development of Vietnam and State Bank of Vietnam – the Vietnamese government’s disbursement of $4.4 billion line of credit to the State Bank of Vietnam will give them major power in whether or not they will provide loans to farmers and other agriculture firms looking to invest in high-tech agriculture. It also allows them to use their discretion in defining high-tech agriculture.[6]

High-tech agriculture firms – this new credit line offered by the State Bank of Vietnam creates a new market for these firms. One of the challenges for these new firms, especially foreign firms, is buy-in from these farmers. They must prove to these farmers that their techniques will yield long term and short term returns. One of their challenges is building that trust with local farmers and ensuring them that their programs and products fit the social, economic, and geographical landscape of Vietnam.

Rice farmers – these farmers may be more in favor of high-tech agriculture because salinization of the Mekong Delta has negatively affected their crop yields. It may also provide them with new, innovative farming techniques. This also gives them the opportunity to diversify their crops, but they must also be willing to take on this new challenge and risk.

Shrimp farmers – these farmers have benefited from the salinization of the Mekong Delta, so they are in a unique position. On one hand, the salinization of the Mekong has improved their business. This is evident from the projected $10 billion in shrimp exports.[7] On the other hand, more and more rice farmers have shifted to shrimp farming, which may oversaturate the regional market. From an environmental standpoint, they may have concerns about the quality of water in which they farm their shrimp. They are placed in a unique position of power because they may have the upper hand in high-tech agriculture negotiations; this is especially relevant in the mangrove-shrimp deal.

Large and small scale farmers – large scale farmers may be more willing to adopt these new practices. They may have the commercial success to be able to take the risks and have the personnel to implement these changes. However, small scale, rural farmers may be more resistant to change. For these farmers, the land and operations may be generations old, and may not buy into these new techniques.

The International Union for the Conservation of Nature and the Netherlands Development Agency launched the Mangroves and Markets initiative which incentivizes shrimp farmers to preserve the mangroves along the Mekong Delta.[9]

Shrimp farmers typically destroy mangroves, which are plants that protect the coastlines from storms

Erosion of these coastlines has resulted in salinization of the Mekong Delta

As part of this initiative, shrimp farmers will maintain 50 percent mangrove coverage in exchange for being certified organic shrimp farmers, which would allow them to sell their products at a premium on the international market

Launched in the provinces of Ben Tre and Tra Vinh

One aspect of climate-smart agriculture is repurposing organic materials for farming materials, and shrimp waste has been used for animal feed. [10]

Environmental impact – shrimp waste in the past acted as an air and water pollutant; reusing this waste solves that issue

More cost-effective option – shrimp waste can be purchased for cheap

With periods of severe flood and drought, developing irrigation systems will assist farmers during the dry season.

Develop a method to collect and store water from floods, i.e. hydropower dams

Build irrigation system that utilizes this water during periods of drought

With the understanding that reversing climate change will not be immediate, the Ministry of Agriculture and Rural Development has recommended the implementation of the following action plan to run through 2020, with the goal of reducing greenhouse emissions by 20 percent every year:[11]

Develop rice cultivation methods that are resistant to severe droughts or floods

Crop diversification, with a focus on hardier crops that are more resilient to climate change

Many farmers grow a single cash crop, so if the seasonal harvest does not yield much, then at least with diversified crops, it will not be as damaging to their income

Ex: growing only rice to rice and bamboo; growing organic vegetables along with raising fish provides additional income in landlocked regions

More effective for large-scale farmers because they have the resources, land, manpower, and capital to accommodate different products

Promote collaboration between small-scale farmers to combat climate change effects on yield loss – an example would be the Mangroves and Markets initiative

Switch from small-scale animal farms to bio-safety farms

Analysis:

It is critical to find the right balance of practices that address short-term and long-term environmental and industry issues. Crop diversification or mixed farming systems may alleviate the income issues for farmers in the short term, but those are merely stop-gap, Band-Aid fixes that do not necessarily address the long-term environmental issues that high-tech and climate-smart agriculture seek to mitigate. Some have suggested that farmers in the Mekong Delta embrace the salinization of the region and switch fully to shrimp farming. This may be a short-sighted approach that could result in lasting negative effects for residents and farmers in the region.

High-tech agriculture may fall short in the buy-in and implementation stages. It would be useful to provide farmers with literature or workshops to educate them about these innovative farming techniques, equipment, and products. This may be crucial for small farmers to buy in because they may be set in their operations, which may be generations old. Breaking old habits may be made easier if these farming techniques and products prove effective in establishing leaner operations. Besides offering friendly interest rates for loans, it behooves the government to offer business or tax incentives to implement these new practices. In regards to implementation of high-tech agriculture, it may be helpful to launch a pilot program in certain provinces of Vietnam for one to three years to show its effectiveness. It is imperative that this pilot program be tailored for the region, especially when engaging with different types of farmers and introducing crops and equipment that are appropriate for the geography. For example, Singapore is investing in vertical farming and artificial light, but introducing that to Vietnam may not be an immediate need because they are focused more on the quality of the Mekong Delta. At the end of this pilot program, it may be necessary to consult with a third party to assess the effectiveness of this program and to see if it can be scaled up for the rest of Vietnam. Furthermore, from a policy perspective, if the government commits to high-tech agriculture, then they may mandate the use of high-tech agriculture farming methods or products. However, if mandates are implemented, they should be done so in an incremental manner. It would be more effective to map out a five to 10-year process, rather than enforcing high-tech agriculture immediately.

High-tech and climate-smart agriculture firms have the potential of tapping into a new market in Vietnam and to contribute to reversing climate change. In some ways, these firms are introducing new technology, such as a new seed or irrigation system. However, in some contexts, just recognizing environmental issues and offering creative solutions, such as the Mangroves and Markets initiative, can be equally effective without changing the day-to-day operations of farmers in the region. It is with this balance that Vietnam may see effective change from a policy and industry perspective.

Student Blog Disclaimer

The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

<h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> ﻿Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>